Is “Sell in May and Go Away” dead in May 2013?
Despite the ongoing concerns related to the global economy, markets continue to see the record levels, and thus investors recently call into question of the view “Sell in May and Go Away”. It is highly possible not to see decreases in the markets in May.
Note that main central banks continue to implement their monetary expansionary policies, and the governments consider to ease fiscal contractionary policies. However, some people still wait a sellof in May.
During these debates, J.P. Morgan strategists say that there will not a sellof action in the markets in May. They show four reasons to support their ideas:
1.The commodity selloff is not a “zero-sum game,” but rather a positive for global growth. “We think it will end up being interpreted as increased purchasing power, rather than raising the specter of deflation.”
2.The U.S. will not repeat the full “double-dip scare” of the prior three years. The big difference this time around compared with the summers of 2010-12 is that house prices are moving up, while jobless claims are moving lower. Some of the big tail-risks have also eased, and U.S. consumer de-leveraging looks mostly done, with the household debt-to-net-wealth ratio below trendline now.
3.Technicals aren’t being stretched. Hedge-fund beta is negative and investors expectations for a correction are up — “a good contrarian signal, in our view.”
4.The periphery — those troubled euro-zone countries — are pretty stable this time around. Thanks to the ECB, there is no sign of the demon of the past — perhipheral bonds threatening to fall into a vicious spiral of ever-increasing yields. Peripheral spreads should keep tightening.
You can support or not…but the view of “Sell in May and Go Away” is probably far away from the markets in May 2013 when you look at “S&P500 Index” !!!